Home loans fall as rates stay unchanged

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The Reserve Bank of Australia today gave homeowners some relief
going into the Christmas period by keeping official interest rates
on hold.

The decision came as national figures showed the total value of
housing finance dropped 3.1 per cent in October as loans for
investment properties came off the boil.

Victoria and the Northern Territory were the only states to
record increases in owner occupied housing finance, while the ACT
and Tasmania recorded the biggest falls.

The central bank made the announcement it would leave rates on
hold at 5.25 per cent after holding its final board meeting for the
year yesterday.

The decision means rates have now been stable for an entire
calendar year, with the RBA last hiking them by 0.25 percentage
points in December 2003.

The RBA's decision comes after a series of economic data,
including last week's national accounts, which suggested economic
growth was slowing.

More indicators of how the economy is travelling are due to be
released later this morning.

Westpac is due to release consumer confidence figures, while the
Australian Bureau of Statistics will publish its latest update on
home loan figures.

The RBA board will next meet in February to consider whether to
raise interest rates or not.

Economists expect the RBA will leave rates on hold well into
next year because of low and stable inflation.

The total value of housing finance dropped 3.1 per cent in
October as loans for investment properties came off the boil,
figures showed today.

The Australian Bureau of Statistics (ABS) said the fall in
housing finance was caused by an 8.1 per cent drop in investment
housing commitments and a 0.4 per cent slide in the value of owner
occupied housing loans.

The falls came after a 1.4 per cent rise in the total value of
housing finance commitments in September.

During October, the number of housing finance commitments for
owner occupied housing fell 0.2 per cent - the second consecutive
monthly fall.

The number excluding refinancing also fell 0.4 per cent.

The ABS said the percentage of first home buyer loans fell
slightly to 16 per cent after six consecutive monthly increases
following the record low recorded in March.